The U.S. labor market continues to tighten, causing companies within the San Francisco Bay Area, Silicon Valley and all across the nation to pass up valuable investment projects, a new survey finds.
The Duke University/CFO Global Business Outlook finds 89 percent of companies surveyed do not intend to pursue all planned projects that would increase revenue and the overall value of their firm, with the inability to hire the right employees a binding constraint at about half of these companies.
For the second quarter in a row, and for only the second time in the history of the 86-year-old survey, difficulty attracting and retaining qualified employees is the top concern of most U.S. Chief Financial Officers. This same concern ranks highly within the SF Bay Area.
After the labor market, the next largest concern among CFOs is the cost of benefits, with health care costs expected to rise by more than 8 percent. Regulatory and governmental policies, economic uncertainty, and data security are also troubling CFOs. "Firms are having a much harder time finding the right managerial talent, and a somewhat harder time hiring rank-and-file workers," said John Graham, a finance professor at Duke's Fuqua School of Business and director of the survey. "In addition, many U.S. companies indicate that their currently employed managers do not have enough bandwidth to oversee an expanded organization. Hence, their firms pull back on expansion."
The survey asked why small businesses and larger companies don't hire or train more managers. CFOs indicate that the pool of potential managers lacks enough candidates with industry-specific experience and technical knowledge, critical thinking skills for complex problems, leadership and people skills, and judgment.
Due in part to the tight labor market, U.S. companies expect to pay higher wages, with median wage growth of about 3 percent over the next 12 months. Wage growth should be strongest in the tech, health care, and construction industries.
Forty percent of U.S. companies said difficulty hiring and retaining technology workers is causing a moderate to substantial negative impact to their organizations. The technology shortage is most evident in operations support, innovation and product development support, IT core functions, and analysis of big data.
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